Berning & Affiliates

Addressing CEO Transition Opportunity In The Current Economy

Given a difficult economy some doctor CEO’s are turning away from plans made over many years to add the next doctor. Others are embracing a good prospect even with the economic turbulence and proceeding to offer a transition opportunity. Specifically, in several instances recently doctors who had planned to add an associate leading to a partner stopped their plans and withdrew their offers. Their instinct told them that with the practices down in production 12-30% it was not the time to continue to add the next doctor. Others in a similar situation are not stopping. Why the difference? In my view it is the doctor CEO’s understanding or not of the context of the practice and the underlying demographics that acts to have one stop and another proceed with a practice transition in this economy. For those practices that have the facility, the staff, and the planning indicating that the practice will benefit, perhaps not immediately but over the intermediate to longer term, they are proceeding to add a good candidate now. For those that have expenditures to make to expand the facility, add the cost of additional staff and in addition marginal demographics indicating the local economy may not recover for a significant period of time, they are the ones not moving forward. Prudent leadership in this economy means basing decisions on facts, including the context of the practice and the underlying demographics.

Its Embarrassing!

This weekend I’ll be presenting No YouTube Moments, Transitioning Your Practice at the AAO Annual Meeting in Denver. This program got started with a prospective associate employee being considered for a progression to partner position. At the end of an interview I attended with the younger doctor and the practice owner, the younger doctor turned to me in the parking lot and said, "That was so awkward, it was funny, it could have been on YOUTUBE!" It really started me thinking! On YouTube you can search for all kinds of topics. One of those is searching on ‘employee’ or ‘unhappy employee’ or ‘embarrassing moments’, you get the idea. Wow! There is a lot of wacky / happy/ unhappy embarrassed people out there! You can do the same with words like dentist, orthodontist and others. But as I have thought about it, it is not what their logo says, video yourself - INSTEAD it is video yourself or someone else doing something that is embarrassing! It is also not only what is embracing, but also what NOT to do in many ways. It is that aspect in part that I’ll be sharing at the AAO meeting, how in the transitioning area to avoid being ill prepared and potentially embarrassing yourself as a practice owner or younger professional.

"Do I Need Professional Help?"

In a consultation this week with a doctor evaluating numerous options for a practice transition strategy he wondered about the following: his investments and their performance, his insurance coverage and whether it was adequate, the documents being prepared (for nearly 2 years) for his estate plan and whether the firm preparing them should take into account his potential practice transfer plans, the marketing and management of the office and how it would be best developed when he brought in an associate or partner. There was more than that which gives you an idea of the number of questions and unmet needs being discussed. All of this discussion was prompted by his wife asking "when are you going to have a plan in place to transition the practice?" And his response to her was, "Do I need professional help to develop the plan?" The answer became obvious the more they talked! If you end up in a similar discussion don't wait -- in this case the doctor and his wife had their discussion 3.5 years earlier and he was just getting around to calling yours truly!

The Best Fit

In a discussion recently with a doctor CEO setting his strategy for a complicated practice succession we reviewed each of the current associates. The doctor commented on the attributes of each younger professional and whether they had met or exceeded his written list of performance expectations. Regarding one of the doctors that had held such promise as the heir apparent for the practice the doctors said, "He is a great associate but given his decision making, more than likely a poor partner." This is was a hard observation to make. We all tend to become invested in people and our goals for them and our organization. But this doctor CEO made the hard call. The younger doctor was great at providing care but took issue with every major initiative, could not seem to connect well with several of the staff and felt he was entitled to an equity position. Given those aspects, and others, the doctor CEO was prepared to keep looking.

The Roar Gets Louder

It is common to come across doctor CEO's who have loved their practices and invested themselves totally. To the point that whole decades go by. One recent client email stated, "I cannot believe I have been in practice for over 28 years. Where did the years go?" The unusual aspect is the doctor CEO who plans early enough, though late in their career, to effect a beneficial transition. Although most doctor CEO's are pressed with day to day practice and personal activity to the point there can be little time left, the roar of the coming end of practice gets louder. Today, as never before with larger and more sophisticated practices it is imperative for doctors to plan sooner rather than later for a potential transition. What combination of transition/succession options fits best for the practice and doctor? Is it an associate and then a sale? Is it a partner with a planned buyout? Is it an immediate sale? Any hire back period for a founder? All of these aspects and others need to be reflected on to design the optimum approach for each doctor CEO.

Sharing Insight

The current California Dental Association Journal, February, 2007, provides a theme issue on practice management and preparing for the stages in practice. Under the leadership of Dr. Bill Van Dyk as the theme editor the topics address are: In The Beginning on starting in practice, by Dr. Van Dyk, Feel Like Giving Up and Getting Out... From Beneath the Mid-Career Squeeze on keeping the practice vital with a perspective on team building, image enhancement and others by Sally McKenzie and my article, Smart Approach To Practice Transition: Options and Strategies, on preparing for transition and retirement. There have already been many positive and complimentary messages about the group of topics and my article. To me the real payoff is that in the dental literature there is now a combined theme or group perspective that can help doctors over time. The combined insight of several authors on a single theme is what should prove helpful. I’d like to suggest that many doctor CEO’s have perspectives on management, marketing, profitability that can help other doctors. Think about sharing your insight to help others!

CEO Dreams Do Come True!

It is always wonderful to hear of doctors really getting all they want from practice and from their life. Here is an excerpt from a recent email I received.

Hello Randy,

Nice to hear from you!! All is well. I bought a large practice in June of 2006. 100% boutique
financing, and I'm making significantly more money in dentistry than I had at any time previously in 10
years!! I do owe a good deal of thanks to you and your lecture at Wired For Success... when you spoke of "The instant doctor". You're lecture inspired me to make a wonderful choice for me and my family. So, I've only been at the practice for 7 months but still managed to increase production over the year by an additional 500,000 dollars, than was projected previously by the old doc and his team. My monthly production averaged 110,000-120,000 before I came and now it is about 180,000 (per month)! I can't tell you how exciting this is! Imagine... I came from nowhere... 1000 miles away - doing medicaid dentistry in Pittsburgh ... I have no special abilities or techniques... I do just plain general preventative
dentistry. This is a dream for me! And every staff member stayed! -And I love em all! The funny thing
is.... there was nobody in line for the practice. (Except for the usual management companies) I did
however locate it, pretty close to the instant that it went on the market... I do confess that I had started
my search as you suggested 1 1/2 years before the practice actually closed. Since June of 2006...
dentistry has realized for me every promise I could have ever imagined. Man I'm lovin' life... and
FLORIDA! Thank you for your help. Now my wife is just beginning her search... but she is ortho and we are tied now to a specific area... but I'm sure something will surface!

Randy, Have a wonderful new year. And thanks again for being a friend and pointing me in the right
direction!

Sincerely,
Joe Shrager

How Can I Volunteer as a Health Care Practitioner?

Dr. Bob Rosenberg, former Dept. Chair of Endodontics, UCSF has provided the following insightful comments on being a health care volunteer.

"Volunteering to provide your services as a dental professional is one of the most rewarding aspects of your career in health care delivery. It is easy to get connected with a dental volunteer opportunity, whether the care is rendered in your own office or in a makeshift clinic half-way around the world.

Mike Anker, a retired endodontist from Schenectady, New York has volunteered on over a dozen trips in a variety of countries. His experiences have resulted in bonds of friendship that otherwise would never have happened. When recounting these experiences he is eager to motivate his peers: "You’ve been given a gift of intelligence and education, and it would be a shame if some of it wasn’t given back to people of lesser means."

If you are interested in a domestic volunteer opportunity a great place to start is the ADA Give Kids A Smile program that takes place on the first Friday in February. Volunteer dentists provide dental care for low income children who have no other access to dental care. Other opportunities abound from the Montgomery Volunteer Dental Clinic in Silver Spring, Maryland to the Inner City Project Dental Storehouse in Salt Lake City, Utah where volunteers provide pro bono treatment in their dental offices. Contact your local or state dental societies for local volunteer programs.

International dental volunteer programs provide opportunities in countries around the world, many in places that you would otherwise never get to see. Health Volunteer Overseas (www.hvousa.org) provides a variety of programs under their Dentistry Overseas component. A copy of their programs may be obtained by emailing international@ada.org and asking for their listing.

Another web site to explore is www.healthcarevolunteer.com. They list many opportunities around the corner and around the world.

Whatever your time availability, your area of expertise, your willingness to make new friends and experience different cultures, a dental volunteer opportunity has an open chair and grateful patient waiting for you."

Read Bob’s first and second "Dear Fellow Docs" letter under the title "Volunteer For Good Letter #2" at our free Berning Affiliates free Downloads section. http://berningaffiliates.com/downloads.htm

Strong Points Revel A Lot

We use a series of questionnaires when qualifying prospective associate and partner doctors. We are currently working through a partnership with two orthodontists. On one of our questionnaires the prospective partner answered the question, "What strong points do you feel that you are bringing to the practice?" as follows. "I have seven years general dentistry experience and have bought, build up and sold a practice. I have been an officer in the military also which has helped strengthen my leadership qualities. I am punctual, efficient, dependable and a good communicator." When I read this answer I was most impressed with the self assessment provided and the implicit and explicit qualities described. In my view, any senior partner or practice owner reviewing this answer would have to thank their lucky stars that such a candidate is considering their practice! The self knowledge and capability expressed is quite different from some younger professionals who tend to answer in broad generalities. Based on this answer, my view is that this is not an associate level candidate, but rather an immediate partner. These attributes would serve any practice and any partner well. A statement of strong points can speak volumes, if you listen. Try it in your practice the next time you interview a prospective associate, partner, or staff member.

Thinking Succession Strategy

A "short play" its not. In a recent consultation with a doctor planning his ultimate exit from practice we discussed a series of suggested steps. He had been anticipating 1-2 year time period to consummate a practice transfer. We discussed and worked through several succession structuring options. But, after we discussed the nature of his significant size two location practice, reality started to dawn. He had grown up with the practice, knew it inside out and could even sense when performance was slightly off. He readily acknowledged that for a younger professional to come into the practice, gain his same level of productivity and manage his size of staff was no ‘short play’. Where and how to start became the focus of our discussion at that point. My suggestion for him, in part, was the same as for most larger or unique format practices we help. Build a transition plan to educate and guide a prospect to the nature and method of maintaining top level practice performance. My experience is that prospects become purchasers when they have a plan provided as part of the practice transfer.